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Why the ‘Sucker List’ of Jordan Belfort, the Wolf of Wall Street, Won’t Be Released to ‘Inside Edition’

By Susan Antilla July 23, 2014 3:07 pmJuly 23, 2014 3:07 pm

Photo

Doug Shadel is an expert on fraud schemes and the elderly at AARP in Seattle.Credit Stuart Isett for The New York Times

The federal judge overseeing the criminal case against Jordan Belfort, the felon depicted in the movie “The Wolf of Wall Street,” had bad news last month for the syndicated newsmagazine “Inside Edition.” He denied its request for a list of Mr. Belfort’s 1,300 victims.

The potential harm that could come from releasing the list to the public is “substantial,” wrote Judge John Gleeson of Federal District Court in Brooklyn, citing the danger of “sucker lists” coveted by fraudsters on the prowl for easy marks.

Financial criminals go to great lengths to hunt down and size up their prey, buying lists of investment seminar attendees, mailing out postcards and spamming investors with email and phone calls. But to the con man, nothing can top the “sucker list.”

“It’s pretty well known in the fraud world that the best list to get is the list of people who have already been taken,” said Doug Shadel, an expert on fraud schemes and the elderly at AARP in Seattle. “The judge is right not to let the public see that list because those are the most vulnerable people.”

More than 8,000 complaints were lodged with the National Consumers League last year, with victims reporting everything from phishing scams to “sweetheart swindles” in which con artists nurture an online relationship and persuade victims to send them money.

Among non-Internet scams, though, the fastest growing frauds were those in which investors who already had been victimized were singled out again, according to Fraud.org, a project run by the consumers league.

The technique has been used to home in on victims of prominent swindles. In 2010, a sham Nigerian website sought out victims of Bernard Madoff’s Ponzi scheme, claiming to have found $1.3 billion of Madoff assets that would be distributed to victims if they would supply the claim numbers from their legal filings and copies of their most recent brokerage account statements.

The site, I-Sipc.com, was shut down after regulators caught on. The Securities and Exchange Commission called it “a fake mirror image of the Securities Investor Protection Corporation’s (SIPC) website.” SIPC is a nonprofit organization that provides some financial protection to customers when brokerage firms fail.

Mr. Shadel said he was surprised at first to learn that con artists preferred to focus on investors who had already fallen for scams because he expected that victims would be on guard. “Why would you want to call somebody who just lost $10,000 to an oil and gas scam?” he asked.

But during interviews with con artists over his career as a consumer advocate and a special assistant to the Washington State attorney general, Mr. Shadel learned that, in the view of criminals, the victim who has lost $10,000 in an energy scam has passed the test of being willing to write a large check to a stranger over the phone, making him a perfect choice.

“Con men told me the first thing they do is let the person rant and rave about their losses, and they write down everything the person says,” Mr. Shadel said. Just like the burglar who goes into a jewelry store the day before they rob it, “They’re casing the mind of the victim by finding out what their hot buttons are.”

Victims get on criminals’ radar screens “basically because they respond to something,” said Anthony Pratkanis, a professor of psychology at the University of California, Santa Cruz who has listened to 645 audiotapes of criminals pitching undercover investigators. Con artists compile names of people who have gone to investment seminars, dropped a business card in a fish bowl at a restaurant or signed up for a free trial of an investment newsletter, he said.

They also find their prey by buying lists of people who have responded to mailings for free sweepstakes. A list that is currently offered online zeros in on “a unique blend of interest-sourced responders” who have both entered a sweepstakes and successfully applied for credit.

In his 2012 book “Outsmarting the Scam Artists,” Mr. Shadel told the story of one boiler-room operator who hired an attractive young woman “to go to work for a competing boiler room” so that she could steal the competitor’s list.

Law enforcement authorities sometimes seize documents that include lead sheets that have been marked up by criminals who profiled their targets, Professor Pratkanis said. “There are a lot of handwritten notes” on those lists that mention favorite sports teams, the targets’ professions and illnesses like Alzheimer’s, he said. Criminals pass those sheets around, enabling others in a boiler room to make a fresh pitch with some inside knowledge about the person on the other end of the phone. The Seattle Seahawks fan might receive a phone call during which the con artist laments a loss by the team on the previous night, Professor Pratkanis said.

Experts on fraud say the most vulnerable victims are those who have experienced some negative life event, like a death of a spouse, a negative change in finances or serious injury or illness in the family. “Events like these chew up your cognitive capacity,” Mr. Shadel said, “so you might not do the safe practices you used to.”

When AARP compared fraud victims with nonvictims in a study released this year, it found that victims were more likely to click on pop-up ads, sign up for free trial offers and to post their personal schedules or calendars online.

The primary target for investment frauds is a male in his 50s or 60s with high financial literacy, Professor Pratkanis said. Con artists flatter and bond with targets who consider themselves to be savvy investors, he said. “They say ‘You are an investor, you know what’s going on.’ ”

John Lawlor, a lawyer on Long Island who specializes in fraud cases, said he derives most of his business from wealthy small-business people who fall for scams after being cold-called at their offices. Some are singled out from lists of business owners compiled by Dun & Bradstreet, and others have responded to offers for a free research report or a newsletter about stocks that pay high dividends.

Sometimes cold-callers even pitch Mr. Lawlor, reaching him as early as 7 a.m. to promote bogus investments. “I mess with them for a while,” he said, pulling up their regulatory records and asking pointed questions about the risks of the product they’re selling.

Ultimately, Mr. Lawlor tells his callers, “I sue guys like you for a living.” And then, finally, Mr. Lawlor said, “They hang up on me.”

A version of this article appears in print on 07/24/2014, on page B5 of the NewYork edition with the headline: Most Victims Are Once Bitten, Twice Shy, Except When It Comes to Fraud.